TYGlobe

I. Preface

As a new type of film and television work that has gained explosive popularity in recent years, tracing its development trajectory, long and short video platforms were the first to make strategic layout based on their own experience, adopting a revenue sharing model between platform operators and micro-short drama producers. Under the aforesaid revenue sharing model, micro-short dramas need to compete with the proprietary content of platforms. Compared with traditional large-production, high-investment films and television dramas, low-cost, short-duration micro-short dramas have difficulty in gaining development space. However, with the rise of mini-program-based micro-short dramas, the original business model for micro-short dramas has been innovated. Mini-program-based micro-short dramas have given rise to new distribution cooperation models, including content distribution, advertising placement, fan economy, pay-to-view, cooperative promotion and so on. Under the currently prevailing distribution cooperation model, after the production of a micro-short drama is completed, the copyright holder licenses part of the rights related to the micro-short drama work to distributors. After the distributors carry out secondary creation, agents will be responsible for the placement and promotion of the work, so as to attract more audiences and further achieve higher return on investment.

II. Potential Legal Risks Confronting Promoting Parties

Following the emergence and rise of the new distribution cooperation model, distributors and agents have officially become an integral part of the micro-short drama industrial chain. After obtaining the corresponding authorization from micro-short drama copyright holders, distributors carry out secondary creation such as editing and film and television commentary, and subsequently obtain proceeds through platform revenue sharing, advertisement insertion and other methods. After distributors complete the secondary processing of micro-short drama content, agents distribute the content through various channels including video platforms, social media platforms and search engine advertisements, and formulate promotion strategies in accordance with target audiences, content characteristics and market demands. Both distributors and agents shall maintain a high level of legal awareness during operation, ensure that their acts comply with the provisions of laws and regulations, and avoid bearing legal liabilities and suffering economic losses. As promoters for distributors and agents, you shall pay attention to the following legal risks:

(I) The Promoter shall simultaneously pay attention to both the copyright of the distributed micro short dramas and the copyright of the content involved in such videos, so as to avoid the risk of intellectual property infringement.

The work of micro-short drama promoters mainly involves clip editing and slicing as well as secondary creation of micro-short dramas. They usually select the most exciting clips from micro-short drama works, and then promote the recreated works to major video platforms, social media and other communication channels, so as to expand audience coverage. Promoters shall examine whether the works they process and promote are at risk of infringing upon the intellectual property rights of others. On the one hand, they shall obtain corresponding authorization from the copyright holders of the micro-short dramas, and ensure that their secondary creation does not exceed the scope of authorization; on the other hand, if the recreated and promoted works involve other materials such as background music, pictures, portraits, game footage, etc., they shall ensure that the use of such materials does not infringe upon the intellectual property rights of third parties.

(II) Where advertisements are inserted in videos, the promoting party shall ensure the legality of the contents of such advertisements, avoid advertisement compliance risks, and meanwhile attach importance to the protection of consumers' rights and interests.

In the process of the launch and promotion of micro-short dramas, copyright holders and promoters may carry out product advertising and promotion through such means as brand cooperation and product placement, so as to obtain advertising revenue. However, promoters acting as advertising publishers shall conduct legality review of advertising contents. Meanwhile, they shall ensure that the advertising contents are authentic and accurate, and free from such circumstances as infringement upon consumers' lawful rights and interests, dissemination of negative information or unhealthy values.

Item (3) Promoters generally rely on social media platforms for dissemination. They shall duly comply with the usage policies and provisions of such platforms to avoid the risk of penalties incurred by violations of social media platform policies.

Publishing works on social media platforms is the most commonly adopted publicity measure for promoting parties. All major social media platforms have their own policies and regulations including Terms of Service, Privacy Policy, Community Guidelines and other similar rules. Promoting parties shall comply with the provisions of the platforms when publishing works. Otherwise, as the subject of publication, the promoting party may face such disposition measures taken by the platform against its published content and account as removal, restriction, suspension or ban. Where the violation of social media platform policies or provisions is concurrent with circumstances such as intellectual property right infringement or losses caused to others, the promoting party may also bear legal liabilities.

(IV) The promoting party shall pay attention to contract and litigation risks.

As a downstream entity in the mini online drama industry chain, the promoter generally needs to enter into cooperation agreements with partners including mini online drama copyright holders, distribution platforms and advertisers. When executing such agreements, the promoter shall carefully review the contracts, particularly key clauses concerning authorized content, scope of services, rights and obligations, fees and payment terms, contract termination, liability for breach of contract, governing law and dispute resolution, so as to safeguard its legitimate rights and interests and avoid litigation risks.

III. Compliance Recommendations

(I) Content Compliance: The promoter shall ensure that the works it creates secondarily and distributes comply with the requirements of laws, regulations and platform policies.

Laws and regulations have shown a trend of gradually tightening supervision over short web drama works. Videos generated from derivative creations including editing, film and television commentary and other forms are incorporated with a variety of new elements. If another person's portrait is used in a video, it will involve the issue of whether the right to portraiture of others is infringed. Video commentary and review content shall observe appropriate boundaries, and shall not commit acts such as insult, defamation, malicious slander and the like in the process of commentary. In addition to complying with mandatory legal provisions, promoted works shall also give consideration to factors such as public order and good morals, social ethics, etc.

(II) Copyright Issues: The promoter shall ensure that the content it promotes does not exceed the scope of authorization, and shall avoid infringing on the intellectual property rights of others when using other materials.

As mentioned above, a distributor may only conduct secondary creation after obtaining authorization from the copyright owner of the short online drama; otherwise, it will constitute intellectual property rights infringement against the short online drama work itself. An agent that releases or promotes videos edited or processed without permission shall also bear infringement risks. Promoters shall pay close attention to the scope of authorization, authorization method, term of licensed use, and whether there are additional conditions attached to the authorization they have obtained. Some copyright owners will explicitly require that promoters must give attribution, shall not modify or distort the work, and comply with other requirements when carrying out promotion activities. In the meantime, where the promoted videos involve materials owned by a third party, promoters shall obtain legal authorization for such materials, or verify that the materials used have entered the public domain, or that their use of such materials falls within the scope of fair use and other legitimate categories.

(III) Advertising Compliance: Where the promoted videos involve such acts as inserted advertisements, brand promotion and others, the promoting party shall ensure that its advertisement publishing acts comply with the requirements of laws and regulations including the Advertising Law of the People's Republic of China, the Measures for the Administration of Internet Advertising, the Law of the People's Republic of China on the Protection of Consumer Rights and Interests.

*Measures for the Administration of Internet Advertising* officially entered into force on May 31, 2023. Article 2 of the Measures stipulates that: "Commercial advertising activities carried out within the territory of the People's Republic of China that directly or indirectly promote goods or services in the form of text, images, audio, video or other forms by using internet media such as websites, web pages and internet applications shall be governed by the *Advertising Law of the People's Republic of China* (hereinafter referred to as the Advertising Law) and these Measures." With regard to the scenario of inserting advertisements in micro-short dramas, promoters shall pay more attention to the specific provisions of the *Measures for the Administration of Internet Advertising*. Matters not stipulated therein shall still be subject to the Advertising Law. The author hereby reminds promoters to pay close attention to the provisions of Article 10 and Article 11 of the Measures. Article 10 stipulates that: "Where internet advertisements are published in such forms as pop-ups, the advertiser and advertisement publisher shall clearly mark the close sign to ensure one-click close, and shall not commit any of the following acts: (1) Having no close sign, or requiring the advertisement to be closed only after the timing ends; (2) Setting obstacles to advertisement closing, such as false, indistinct or unlocatable close signs; (3) Requiring more than two clicks to close the advertisement; (4) In the process of browsing the same page or the same document, popping up advertisements repeatedly after being closed, which affects users' normal use of the internet; (5) Other acts that affect the realization of one-click close. The aforesaid provisions shall apply to splash screen advertisements displayed and published upon the launch of an internet application." Article 11 stipulates that: "No one shall deceive or mislead users into clicking or browsing advertisements in the following ways: (1) False prompts of system or software update, error report, cleanup, notification and the like; (2) False signs of play, start, pause, stop, return and the like; (3) False reward commitments; (4) Other ways to deceive or mislead users into clicking or browsing advertisements." It can be seen from the above legal provisions that the *Measures for the Administration of Internet Advertising* have strengthened restrictions on short video advertisements on the basis of the Advertising Law, with more detailed contents. Therefore, when placing advertisements in short videos, relevant legal provisions shall be strictly complied with to avoid complaints and penalties arising from violation of relevant laws and regulations. In addition, when placing advertisements, both advertisers and advertisement publishers shall sign a written advertising contract, perform the reasonable review obligation over the contents of the contract, including reviewing the identity of the advertiser, various qualification documents of relevant goods/services, and whether the publicity copy complies with the relevant provisions of the Advertising Law, and stipulate the liability bearing for damage consequences.

(IV) Contract Review It is recommended that contract review be conducted by professionals. Contract review is a necessary procedure for the promoting party prior to the commencement of business operations. Prior to the execution of a contract, the party concerned shall carefully read the contents of the contract and review each clause of the contract one by one, so as to avoid potential legal disputes.

When handling a number of contract dispute cases, the author has found that some clients, considering the subject matter is of small value or the transaction is relatively simple, omit the procedure of signing a contract or have the contract signed without review by legal professionals. As a result, the signed contract fails to stipulate key terms and the protection of their legitimate rights and interests. When disputes arise between the parties to the contract, they will face the risk of losing the lawsuit due to the absence of a written contract or deficient terms of the signed contract. Therefore, the author suggests that where monetary transactions are involved, especially in business dealings, the parties shall conclude detailed and sound contracts as far as possible, and have such contracts drafted or reviewed by legal professionals, so as to protect their legitimate rights and interests to the greatest extent and avoid legal risks.

IV. Summary

This article sorts out the legal risks and compliance recommendations for promoters under the micro-short drama distribution model, and is the final piece of the special series entitled *Legal Risks and Compliance Recommendations for the Micro-short Drama Industry*. This special series analyzes the legal risks faced by all relevant parties involved in the micro-short drama sector and puts forward corresponding compliance recommendations. In the meantime, as micro-short dramas represent an emerging legal practice area, the current laws and regulations of China may not be sufficient to regulate or address the practical problems encountered therein. The author welcomes questions from readers after they finish reading the full series of articles of this special project, and also welcomes communication and exchanges with readers to jointly discuss the legal issues involved in the micro-short drama industry.